**8. Conclusion**

Climate change is rapidly proceeding, and climate-related risks are being exacerbated. While the mechanisms of physical climate change and the possible impacts are scientifically well understood, the specific estimates of these impacts are associated with uncertainty.

Climate change will affect all sectors of the economy, and it is relevant to investors and financial institutions, posing an unprecedented challenge to the governance of global socioeconomic and financial systems. Climate-related risks touch on the interests of a broad range of stakeholders across the private and public

#### *Banking and Finance*

sectors, impact all the key dimensions of credit risk, and are the main channels through which climate change can affect financial stability.

This chapter establishes the need for organizations to have a holistic, welldocumented, and institution-wide risk management framework that extends across all business lines and internal units to manage their climate-related risks.

In all, the chapter provides a preliminary view on how climate change can cause credit risk and financial instability. As such, the chapter does not comprehensively address the complex tasks of managing climate-related risks in organizations. A more comprehensive study is required on what strategies and approaches are needed to manage uncertainties and risks that are an integral part of climate change in organizations.
